AWC's purchase target hit with RM19m demand letter

In a filing with Bursa Malaysia, Country View said that the acquisition

KUALA LUMPUR: AWC Bhd's acquisition target, Trackwork & Supplies Sdn Bhd, has received a letter of demand from a customer for a sum of RM19mil.

The demand letter claims that some of the machines the customer received from railworks company Trackwork are defective and is seeking liquidated agreed damages, cost of rental and expenses for replacement machines.

AWC is in the midst of a proposed acquisition of three million shares or 60% equity interest in Trackwork for a cash and share deal worth RM43.5mil. 

The group said it is currently assessing the implication of the claim with regards to its purchase proposal.

"The Board has decided to only proceed with the completion of the Proposals when the Sellers and Trackwork are able to settle the aforesaid claim without any material negative impact on the financial performance of Trackwork.  

"In this regard, and if necessary, the Company will seek to include the settlement or resolution of this claim to the Company's satisfaction as a condition precedent to the SSA vide a supplemental SSA. 

"For the avoidance of doubt, the Company will not assume any liability arising from this development," it said.  

AWC added that the development would be discussed at the extraordinary general meeting, which was slated for 2pm today. 

A successful completion of AWC's stake purchase would see Trackwork contributing more than 25% to the group's net profits, resulting in a diversification of its existing core business to include rail-related works. 

Trading in AWC shares has been suspended since noon for the remainder of the day's trading session. The counter was trading unchanged at 69.5 sen a share on volume of 112,000 shares prior to the suspension.